AFL-CIO Council Rebuffs President On Wage Limits

By Helen DewarBy Helen DewarMay 11, 1978

The AFL-CIO Executive Council yesterday rejected a plea from President Carter that unions restrain their wage demands, arguing that the administration's anti-inflation campaign should concentrate first on bringing down prices.

A statement rejecting Carter's proposal for wage as well as price deceleration was adopted by the council after a meeting at the White House that was described by both sides as tense.

Carter left before the session was over, and was described by a senior White House official as "not at all happy with the response he received. He said what he wanted to say and heard about all he wanted to hear," the official said.

"The White House was looking for instant solutions, and instant solutions weren't there," said an AFL-CIO official. "I don't think either side was all that happy with what the other said said."

The AFL-CIO's response was consistent with its earlier rejection of anything remotely resembling wage controls or guidelines, but the White House apparently hoped to nudge the labor federation into embracing its 5-month-old call for voluntary restrictions to hold wage and price increases below 1976-77 levels. A group of business leaders came out of a similar meeting with Carter last month pledging, in general terms, to support the program.

The administration contends that wage and price restraints must go hand in hand to break the inflation rate, now nearly 7 per cent, while the AFL-CIO argues that wage increases will taper off automatically as prices and interest rates begin to fall.

Major labor contracts negotiated in the first quarter of this year call for average first-year wage increases of 9.9 percent, and hourly wage rates in the economy as a whole are now about 8 percent above a year ago. But prices are rising almost as fast, so that the purchasing power of an average hour's work, has risen 1.4 percent in the last year.

At a news conference after yesterday's AFL-CIO President George Meany sought to accentuate the positive, saying the Executive Council endorsed "the heart of the president's program" but could not commit unions to a specific wage ceiling in contract negotiations, as the president suggested in urging wage settlements below 1976-77 levels.

Asked if the AFL-CIO was killing the voluntary program by refusing the biggest contribution unions could make to controlling inflation, Meany said such an assumption was "dead wrong." All the AFL-CIO is saying, he said, is that "We will not accept a fixed figure to control our wages whether it's by presidential order or fiat or what have you."

Businesses can raise or lower prices at any time, while unions are locked into contracts than run up to three years and hence lack the flexibility to act, Meany argued. Moreover, he said, corporations have raised prices while endorsing the president's program of voluntary restraint.

"The president of General Motors came out of the White House and said that he applauded the president's program and went right back to Detroit and raised prices on some of his cars," said Meany. "We're not going to follow that."

The AFL-CIO statement described the 14-million-member federation as "ready, willing and able to cooperate in identifying inflationary forces and support programs designed to tackle specific inflationary pressures," but said specific wage ceilings would "stultify the give-and-take process of collective bargaining and exacerbate existing inequities."

It also called on Carter to reconsider his proposed 5.5 percent ceiling on pay increases for federal workers, and proposed these other steps: reduction in interest rates, more jobs programs, reserve food stockpiles and more effective export controls, continued regulation of natural gas, enactment of a hospital cost containment program and rollback of the Social Security tax increase.

While resisting wage restraints, Meany said he would spread the word of any price de-escalation to union officials and said he was confident that they would "react" at the bargaining table. "I'm sure that the demands for wage increases will be far more moderate when the prices go down," he said.

Conspicuously absent from the White House meeting was the teamsters union, the nation's largest and a major target of the administration's wage-price restraint effort. At least one other non-afl-cio union attended.

The meeting followed by one day another White House meeting with the AFL-CIO Executive Council, in which Carter renewed his support for the union-backed labor law revision bill.

Officials denied that the federation's rebuff to the wage restraint proposal would affect the administration's support of the labor bill, and Meany angrily rejected suggestions that public support for the measure might be cooled by the inflation statement.